Container Leasing 30 COSCO Paciﬁc Limited Annual Report 2005

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1 Container Leasing 30

2 China s foreign trade and the global economy are expected to continue to grow. The increasing demand for larger container fleets, increasing containerisation in China and a higher utilisation rate will become the major drivers of our container leasing business. Focusing on our profitability and building our presence in the market, we constantly evaluate our service offering to cope with the changing patterns of the economy, trade, the leasing industry and most importantly our customers needs. During the year, we did an excellent job in marketing and achieved a satisfactory operating performances. As at 31st December 2005, COSCO Pacific owned and operated the world s third largest container leasing company, with a fleet size of 1,042,852 TEUs, accounting for approximately 10.9% of global market share. 31

3 Movement & control Containers used worldwide On / off hire Customers Florens Container leasing operation 32

4 Customer on-hire Manufacturers Manufacturers build containers according to market demand Asia Pacific 36% Americas 27% 180 depots worldwide Container storage, repair & maintenance Europe 37% Customer off-hire Vendors 33

5 Top 10 container leasing companies in 2005 (Unit: TEUs) Triton Textainer COSCO Pacific (Florens) TAL Int l GE Seaco Interpool CAI Capital Cronos 415,000 (4.4%) 665,000 (7.0%) 600,000 (6.3%) 505,000 (5.3%) 1,042,852* (10.9%) 970,000 (10.2%) 950,000 (10.0%) 1,355,000 (14.2%) 1,200,000 (12.5%) Market Review Global containerised trade grew 11.2% in 2005, according to Drewry Shipping Consultants. Demand for containers in 2005 was also boosted by global economic growth, a strong increase in China s foreign trade and a higher containerisation rate. Business Review In 2005, Florens Container Holdings Limited ( Florens ) ranked the world s third largest container leasing company, up from the fourth place in the previous year. Its share of the global market was approximately 10.9% in 2005, up from 10.1% in Florens customer base grew from 218 in 2004 to 256 in 2005, and container fleet capacity increased by 13.5% to 1,042,852 TEUs. Gateway 330,000 (3.5%) Market share and fleet size Source: Containerisation International Market Analysis, February 2006 *Remarks: Flovens container fleet capacity as of 31st December % 9.7% 10.1% 10.9% Top 10 container shipping companies in 2005 (Unit: TEUs) Maersk Sealand 1,678,448 (18.0%) 8.4% 610, , , ,128 1,042,852 MSC 809,395 (8.7%) CMA CGM Evergreen Hapag Lloyd 529,187 (5.7%) 492,654 (5.3%) 423,855 (4.6%) CSCL 352,483 (3.8%) Container fleet (TEUs) Market share COSCON 332,998 (3.6%) Hanjin 328,794 (3.5%) APL 318,145 (3.4%) NYK 299,709 (3.2%) Source: March

6 Container fleet movement (TEUs) Total number of containers (as at 1st January) 919, ,825 New containers purchased 168, ,526 Containers returned from COSCON upon expiry of leases - Total - Re-leased - Disposed of and pending for disposal (26,354) 344 (26,010) (38,055) 2,436 (35,619) Ownership transferred to customers upon expiry of finance leases (629) (508) Defective containers written off (4) (259) Total loss of containers declared and compensated for by customers (18,225) (8,837) Total number of containers (as at 31st December) 1,042,852* 919,128* *Including 34,603 TEUs (2004: 23,639 TEUs) managed on behalf of a third party. 35

7 Container fleet analysis by type of container (TEUs) 31st December 2005 Total COSCON Total number of containers 1,042, ,324 (36.2%) International Customers 665,528 (63.8%) Dry (%) Reefer (%) Special (%) st December 2004 Total COSCON Total number of containers 919, ,845 (35.7%) International Customers 591,283 (64.3%) Dry (%) Reefer (%) Special (%) Rental income Turnover rose 7.5% to US$276,313,000 (2004: US$257,046,000) in 2005, driven by strong global trade growth and our increased market share. Income breakdown by type of leasing 15% 20% 65% 17% 22% 61% 18% 27% 55% 18% 35% 47% 16% 38% 46% International customers (master lease) International customers (long term lease) COSCON 36

8 In 2005, containers returned from COSCON upon expiry of the leases ( Returned Containers ) totalled 26,354 TEUs, compared with 38,055 TEUs in The total number of Returned Containers disposed of during the year was 26,838 TEUs, compared with 39,488 TEUs in the previous year. The disposal generated a net profit of US$6,122,000 in Average utilisation rate above industy average 91.4% 75% 83% 93.4% 89% 95.2% 97.0% 92% 90.9% 95.5% Florens average utilisation rate was around 95.5% in 2005, slightly down from 97.0% in 2004, but was 4.6 percentage points above the industry average of around 90.9%. Outlook We maintain a positive outlook for both China trade and the global economy. The main drivers of the development of container leasing and its revenue are sustainable growth in both global trade and container trade, increased containerisation globally and a higher utilisation rate. Demand will also come from the commissioning of new vessels with capacity of 1,220,000 TEUs in 2006, which will benefit the container leasing industry. Container box prices are expected to be stable Industry COSCO Pacific (Florens) 37

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